Does California offer other additional tax incentives for OZ investors? Are there any plans for the state to conform to the federal OZ program?
Great question! The state of Ohio not only conforms to the federal income tax code, it also offers a complementary 10% state income tax credit on investments made into Ohio opportunity zones and irrespective of whether the investment is comprised of deferred gain or ordinary after-tax cash. Furthermore, if an out-of-state investor doesn't have an Ohio state income tax liability, then they can sell the tax credit for cash to someone who does.
You still get the federal benefits for investments in California, even if you don't get the state-level benefits. For all the flak it gets, California is still an enormous economy unto itself and people will invest there.
I doubt CA will change anything - it does not treat capital gains separately from other income, so it has no ability to reconcile with the Federal program.
I have a couple of guesses. First, California is the most populous state and therefore should have proportionately more opportunities in which investors can invest their opportunity zone dollars. Second, in the case of investors from other states, California wouldn't tax the gains that such investors are deferring through their investment in qualified opportunity funds; those gains are subject to taxation by the investors' home states. I am not aware of any plans for the state to conform to the federal opportunity zone program.
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